![9
Critical Materials Prices: 10 Year Perspective
AMG has significant
potential upside within
certain critical materials
based on historical price
ranges
Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated using the formula [(Mar ‘06 month avg –
min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Mar ‘06 through 31 Mar ‘16.
3.0
0.3 0.2 0.4
3.3
1.4
1.7
2.1
5.8
0.1
0.9
4.6
1.3 1.3 1.4
4.5
2.5
3.4
5.9 5.8
2.5
3.3
0
2.5
5
7.5
10
Scale
Metals
Mar 2016 Position Mar 2015 Position
Cr Mo Ni FeV Ti Al C Si Ta Sb
Highest
Price in
10 years
Lowest
Price in
10 years
[unchanged]
• Metal prices are measured on a
scale of 0 to 10, with 0 and 10
representing the minimum and
maximum average quarterly
prices occurring during the past
10 years
• The positions demonstrate the
current price level of each metal
with respect to their various
historical price points over the
past 10 years
Nb](https://image.slidesharecdn.com/amginvestorpresentationmay2016-160504094426/85/AMG-Investor-Presentation-May-2016-9-320.jpg)
AMG Investor Presentation - May 2016
- 1. LEADING THE CRITICAL MATERIALS REVOLUTION AMG Advanced Metallurgical Group N.V. Investor Presentation May 4, 2016
- 2. 2 About AMG 4 CO2 Reduction 5 Strong Capital Structure 6 Critical Raw Materials 7 Critical Materials Price Trends 8 Critical Materials Prices: 10 Year Perspective 9 AMG Business Segments 10 Global Footprint 11 Health and Safety Focus 13 Financial Highlights 14 Strategy & Outlook 26 Key Products & End Markets 30 Appendix 36 TABLE OF CONTENTS
- 3. 3 THIS DOCUMENT IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION BY AMG ADVANCED METALLURGICAL GROUP N.V. (THE “COMPANY”) AND MAY NOT BE REPRODUCED IN ANY FORM OR FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries nor should it or any part of it, nor the fact of its distribution, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This presentation has been prepared by, and is the sole responsibility of, the Company. This document, any presentation made in conjunction herewith and any accompanying materials are for information only and are not a prospectus, offering circular or admission document. This presentation does not form a part of, and should not be construed as, an offer, invitation or solicitation to subscribe for or purchase, or dispose of any of the securities of the companies mentioned in this presentation. These materials do not constitute an offer of securities for sale in the United States or an invitation or an offer to the public or form of application to subscribe for securities. Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection with, any offer or commitment whatsoever. The information contained in this presentation has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information or the opinions contained herein. The Company and its advisors are under no obligation to update or keep current the information contained in this presentation. To the extent allowed by law, none of the Company or its affiliates, advisors or representatives accept any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Certain statements in this presentation constitute forward-looking statements, including statements regarding the Company's financial position, business strategy, plans and objectives of management for future operations. These statements, which contain the words "believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “may,” “should” and similar expressions, reflect the beliefs and expectations of the management board of directors of the Company and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, the achievement of the anticipated levels of profitability, growth, cost and synergy of the Company’s recent acquisitions, the timely development and acceptance of new products, the impact of competitive pricing, the ability to obtain necessary regulatory approvals, and the impact of general business and global economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Neither the Company, nor any of its respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice. This document has not been approved by any competent regulatory or supervisory authority. Cautionary Note
- 4. 4 SUPPLY: AMG Sources, processes, and supplies the critical materials the market demands GLOBAL TRENDS CO2 emission reduction, population growth, increasing affluence, and energy efficiency DEMAND Innovative new products that are lighter, stronger, and resistant to higher temperatures AMG IS A CRITICAL MATERIALS COMPANY
- 5. 5 AMG: MITIGATING TECHNOLOGIES Products and Processes saving raw materials, energy and CO2 emissions during manufacturing (i.e., recycling of Ferrovanadium) AMG: ENABLING TECHNOLOGIES Products and Processes saving CO2 emissions during use (i.e., light-weighting and fuel efficiency in the aerospace and automotive industries) AMG HAS DEVELOPED INTO A LEADER IN ENABLING TECHNOLOGIES A GLOBAL IMPERATIVE FOR THE 21ST CENTURY CO2 REDUCTION LEADER IN ADVANCED TECHNOLOGIES TO ADDRESS CO2 REDUCTION
- 6. 6 6 • Refinanced credit facility in 2015, providing a stable capital base and liquidity for strategic growth • Deleveraged balance sheet; zero net debt at end of FY15 OPTIMIZED CAPITAL STRUCTURE • Rigorous process to review strategic growth opportunities that is both selective and opportunistic • Organic growth strategy is focused on areas of our portfolio that are marked by strong demand growth or supply limitations • Financially and operationally capable of quickly assessing opportunities • Initiated first dividend to shareholders in 2015 • Reflecting AMG commitment to return value to shareholders DISCIPLINED ORGANIC GROWTH & ACQUISITIONS RETURN EXCESS CASH TO SHAREHOLDERS Strong capital structure, free of net debt, positioned for growth Driving long-term sustainable growth and shareholder value
- 7. 7 Heavy REE Niobium Chromium Light REE Magnesium Germanium Indium Gallium Cobalt Beryllium PGMS Fluorspar Phosphate Rock Borate Magnesite Tungsten Coking Coal Vanadium Aluminum alloys TinMolybdenum Nickel Antimony Silicon Metal Natural Graphite Tantalum SUPPLYRISK ECONOMIC IMPORTANCE Critical Raw Materials • The EU identified 20 critical raw materials* to the European economy in 2014, focusing on two determinants: economic importance and supply risk • The US identified 30 critical materials* which are vital to national defense, primarily through assessing supply risk • AMG has a unique critical materials portfolio comprising: – 5 EU critical raw materials – 4 US critical raw materials – Highly engineered Titanium Alloys for the aerospace industry – High value added Aluminum Master Alloys – Vanadium, Nickel and Molybdenum from recycled secondary raw materials Melted or treated by AMG vacuum systemsProduced by AMG Critical raw materials identified by the US and produced by AMG EU Critical Raw Materials *Report on Critical Raw Materials for the EU, May 2014; Strategic and Critical Materials 2015 Report on Stockpile Requirements by Department of Defense in January 2015. Titanium alloys Lithium
- 8. 8 Critical Materials Price Trends CRITICAL MATERIAL PRICES OUTPERFORM THE LME -50% 0% 50% 100% 150% 200% 1. AMG EU Critical Materials 2. AMG Portfolio (includes #1) 3. LME Metals 4. Oil 10 Yr CAGR: -3.5% 10 Yr CAGR: 2.9% 10 Yr CAGR: 2.7% 10 Yr CAGR: -4.9% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 AMG: EU Critical Materials OIL LME Metals AMG Portfolio Note: Compound annual growth rates are calculated over the period Mar ‘06 through Mar ‘16 using the equation ((Ending Value / Beginning Value) ^ (1 / # of years) - 1) where ending value is avg monthly price in Mar ‘15 and beginning value is avg monthly price in Mar ‘06; and where AMG EU Critical Materials include Sb, Cr, Graphite & Si; AMG Portfolio includes Sb, Cr, FeV, Li, Nb, Si, Sr, Graphite, Ta, Sn & Ti; and LME Metals include Al, Co, Cu, Pb, Mo, Ni, & Zn. Avg annual growth rates (plotted above) are calculated over the same period using the equation ((Ending Value / Beginning Value) -1) and considering the same metal categorizations where ending value is avg monthly price in Dec of the given year and beginning value is avg monthly price in Mar ‘06. The cumulative average 10 year price appreciation of the AMG EU Critical Materials was 6.4 percentage points higher than LME Metals and 7.8 points higher than oil, while the AMG Portfolio outperformed LME Metals and oil by 6.2 and 7.6 percentage points, respectively
- 9. 9 Critical Materials Prices: 10 Year Perspective AMG has significant potential upside within certain critical materials based on historical price ranges Note: Metal Positions are measured on a scale of 0 to 10, with 0 being the minimum price and 10 being the maximum price. They are calculated using the formula [(Mar ‘06 month avg – min. monthly avg) / (max. monthly avg – min. monthly avg) *10] where maximum and minimum monthly averages are measured over the period 1 Mar ‘06 through 31 Mar ‘16. 3.0 0.3 0.2 0.4 3.3 1.4 1.7 2.1 5.8 0.1 0.9 4.6 1.3 1.3 1.4 4.5 2.5 3.4 5.9 5.8 2.5 3.3 0 2.5 5 7.5 10 Scale Metals Mar 2016 Position Mar 2015 Position Cr Mo Ni FeV Ti Al C Si Ta Sb Highest Price in 10 years Lowest Price in 10 years [unchanged] • Metal prices are measured on a scale of 0 to 10, with 0 and 10 representing the minimum and maximum average quarterly prices occurring during the past 10 years • The positions demonstrate the current price level of each metal with respect to their various historical price points over the past 10 years Nb
- 10. 10 AMG Business Segments AMG CRITICAL MATERIALS AMG’S CONVERSION, MINING, AND RECYCLING BUSINESSES • VANADIUM • SUPERALLOYS • TITANIUM ALLOYS & COATINGS • ALUMINUM ALLOYS • TANTALUM & NIOBIUM • ANTIMONY • GRAPHITE • SILICON AMG ENGINEERING AMG’S VACUUM SYSTEMS AND SERVICES BUSINESS • ENGINEERING • HEAT TREATMENT SERVICES
- 11. 11 11 AMG Global Footprint – Critical Materials CHINA SRI LANKA ZIMBABWE BRAZIL MOZAMBIQUE U.S.A. FRANCE UK GERMANY CZECH REPUBLIC Chromium Metal Antimony Natural Graphite Silicon Metal Titanium Alloys & Coatings Aluminum Master Alloys, Aluminum Powders FeV Tantalum Niobium Nickel Molybdenum
- 12. 12 12 AMG Global Footprint – Engineering Mexico City, MEXICO Port Huron (MI), USA Berlin, GERMANY Limbach, GERMANY Mumbai, INDIA Suzhou, CHINA Wixom (MI), USA Grenoble, FRANCE Headquarters Production Facility Heat Treatment Services Hanau, GERMANY Head Office
- 13. 13 Health and Safety Focus LEADING SAFETY INDICATORS • The number of safety improvement items reported increased by 13% compared to the 12 month period ending March 2015. These are essential in order to avoid potential injuries. • Incident severity rate over the 12 months ending March 2016 is down 37% from the previous 12 month period. • Days away from work resulting from these lost time incidents are down 35%. RIGOROUS COMMITMENT TO SAFETY REFLECTED IN CONTINUALLY IMPROVING SAFETY RECORDS PERIOD ENDING MARCH LOST TIME INCIDENTS IN THE LAST 12 MONTHS 12 MONTH AVERAGE LOST TIME INCIDENT RATE 12 MONTH AVERAGE INCIDENT SEVERITY RATE 2015 32 1.30 0.19 2016 29 1.08 0.12
- 14. FINANCIAL HIGHLIGHTS AMG Advanced Metallurgical Group N.V.
- 15. 15 AMOUNTS IN $M (EXCEPT EARNINGS PER SHARE) Q1 2016 Q1 2015 % CHANGE REVENUE $237.4 $257.0 (8%) GROSS PROFIT $44.3 $43.3 2% GROSS MARGIN % 18.7% 16.8% 11% PROFIT BEFORE INCOME TAXES $12.6 $8.1 56% EBITDA $21.2 $20.4 4% EBITDA MARGIN % 8.9% 7.9% 13% NET DEBT $17.2 $86.8 (80%) RETURN ON CAPITAL EMPLOYED (ROCE) 14.7% 12.7% 16% NET INCOME ATTRIBUTABLE TO SHAREHOLDERS $12.0 $2.7 347% EARNINGS PER SHARE 0.42 0.10 320% Q1 2016 at a Glance • Q1 ‘16 EBITDA up 4% versus Q1 ‘15 due to improved profitability within AMG Engineering • Annualized ROCE increased to 14.7% versus 12.7% in Q1 2015 • Q1 ‘16 revenue declined by $20 million, or 8%, compared to Q1 ‘15, driven largely by weak metal prices • Net debt: $17.2 million – $69.6 million reduction of net debt since Q1 2015 – Net debt to LTM EBITDA: 0.23x NET DEBT REDUCTION OF $69.6 MILLION SINCE Q1 2015
- 16. 16 $20.4 $25.1 $20.4 $9.7 $21.2 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 $257.0 $257.4 $241.9 $220.8 $237.4 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 $43.3 $44.6 $39.7 $32.4 $44.3 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Financial HighlightsFinancial Highlights REVENUE (IN MILLIONS OF US DOLLARS) EBITDA (IN MILLIONS OF US DOLLARS) GROSS PROFIT (IN MILLIONS OF US DOLLARS) 8% YoY 2% YoY $51.9 $81.8 $67.4 $48.0 $50.5 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 ORDER INTAKE (IN MILLIONS OF US DOLLARS) 3% YoY4% YoY
- 17. 17 IMPROVE ROCE IMPROVE GROSS MARGIN • Increase ROCE through operational improvements and disciplined capital management • Increase productivity through continuous cost and product mix optimization 2016 Financial Objectives FINANCIAL OBJECTIVE DESCRIPTION PURSUE GROWTH OPPORTUNITIES MAINTAIN CONSERVATIVE BALANCE SHEET • Optimize capital structure for financial flexibility PROGRESS UPDATE • Net debt down by $69.6 million, or 80%, versus the end of Q1 2015 • On March 10th, 2016, AMG’s announced the completion of an affirmative prefeasibility study for the recovery of Spodumene, a lithium-bearing mineral, from its Volta Grande mine tailings resource in Brazil • Annualized ROCE increased to 14.7% in the first quarter 2016, as compared to 12.7% in the first quarter 2015 • AMG gross margin increased to 18.7% in Q1 2016 from 16.8% in Q1 2015 despite falling metals prices • Pursue organic opportunities in high-growth areas within the existing product portfolio • Pursue opportunities for horizontal and vertical industry consolidation across AMG’s critical materials portfolio
- 18. 18 Financial Data: ROCE & EBITDA • Q1 ‘16 EBITDA up 4% versus Q1 ’15 due to improved profitability within AMG Engineering • Q1 2016 annualized ROCE improved to 14.7% from 12.7% in Q1 2015 • ROCE improvements are the result of efficient use of capital and improved profitability ANNUALIZED ROCE EBITDA (IN MILLIONS OF US DOLLARS) $20.4 $25.1 $20.4 $9.7 $21.2 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q1 ‘16 ROCE IMPROVED TO 14.7% FROM 12.7% IN Q1 ‘15 Q1 ‘16 EBITDA UP 4% VERSUS Q1 ‘15 9.2% 7.4% 11.9% 12.0% 12.7% 14.7% 2012 2013 2014 2015 Q1 '15 Q1 '16
- 19. 19 $194.2 $160.5 $87.8 $86.8 $17.2 2012 2013 2014 Q1 '15 Q1 '16 -$10 $5 $20 $35 $50 Q1 Q2 Q3 Q4 2012 2013 2014 2015 2016 Financial Data: Net Debt & Operating Cash flowFinancial Data: Net Debt & Operating Cash Flow • Net debt: $17.2 million – $143.3 million reduction on net debt since December 31, 2013 – Net Debt to LTM EBITDA: 0.23x • AMG’s primary debt facility is a $320 million multicurrency term loan and revolving credit facility – 3 year term (until 2018) with two extension options of one year each. – In compliance with all debt covenants • Q1 ‘16 cash flows used in operating activities were $4.3 million due to an increase in working capital, following low levels at the end of Q4 2015, and a temporary decline in advanced payments at AMG Engineering due to timing NET DEBT (IN MILLIONS OF US DOLLARS) OPERATING CASH FLOW (IN MILLIONS OF US DOLLARS) $177M REDUCTION IN NET DEBT SINCE 2012 TEMPORARY DECLINE IN ADVANCED PAYMENTS IN Q1 2016
- 20. 20 Divisional Financial Highlights – Q1 2016 v Q1 2015 REVENUE EBITDA (in USD millions) (in USD millions)Q1 2016 EBITDA: $21.2 Q1 2016 REVENUE: $237.4 Q1 2016 GROSS MARGIN: 18.7% GROSS MARGIN CAPITAL EXPENDITURE (in USD millions)Q1 2016 CAPEX: $6.9 $54.7 $202.3 $60.8 $176.6 AMG Engineering AMG Critical Materials Q1 2016 Q1 2015 $3.1 $17.3 $4.6 $16.5 AMG Engineering AMG Critical Materials Q1 2016 Q1 2015 $1.0 $2.8 $2.4 $4.5 AMG Engineering AMG Critical Materials Q1 2016 Q1 2015 22.1% 15.4% 22.7% 17.3% AMG Engineering AMG Critical Materials Q1 2016 Q1 2015
- 21. 21 WORKING CAPITAL DAYS REDUCED BY 67% SINCE Q3’10 Financial Highlights 79 69 70 70 70 65 65 65 65 62 61 53 47 43 47 42 31 23 28 30 30 19 26 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Working Capital Reduction 53 DAYS, OR 67% REDUCTION Q1 ‘11 Q2 ‘11 Q3 ‘11 Q4 ‘11 Q1 ‘12 Q2 ‘12 Q3 ‘12 Q4 ‘12 Q1 ‘13 Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q3 ‘10 Q4 ‘10 Q4 ‘14 Q1 ‘15 Q2 ‘15 Q3 ‘15 Q4 ‘15 Q1 ‘16
- 22. 22 $202.3 $201.2 $187.7 $166.3 $176.6 $17.3 $21.0 $15.5 $7.0 $16.5 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Revenue EBITDA $2.8 $2.8 $4.8 $10.0 $4.5 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Financial Data: Net Debt & Operating Cash flowAMG Critical Materials REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) CAPITAL EXPENDITURES (IN MILLIONS OF US DOLLARS) Q1 2016 REVENUE IMPACTED BY WEAK METALS PRICES INCREASE OF $1.7M Q1 ‘16 VS. Q1 ’15 DUE TO ANCUABE GRAPHITE MINE PROJECT • Q1 2016 revenue down $25.7 million, or 13%, vs. Q1 2015 due to double-digit declines in average quarterly prices for all key products year-over-year • Q1 ‘16 EBITDA margin increased to 9.4% from 8.5% in Q1 ‘15. • Capital expenditures increased to $4.5 million in Q1 2016 compared to $2.8 million in Q1 2015 • The largest expansion capital project was for AMG’s Ancuabe graphite mine project
- 23. 23 KEY PRODUCT Q1 ‘16 REV ($M) Q1 ‘15 REV ($M) VOLUME PRICE CURRENCY FeV & FeNiMo $19.0 $30.3 Al Master Alloys & Powders $41.9 $49.4 Chromium Metal $20.2 $22.4 Tantalum & Niobium $17.4 $15.8 Titanium Alloys & Coatings $20.7 $20.6 Antimony $20.3 $27.3 Graphite $14.9 $14.9 Silicon Metal $22.0 $21.5 AMG Critical Materials – Quarterly Revenue Drivers • Revenues were adversely impacted by falling metals prices during the quarter, with all of AMG’s 9 critical materials experiencing double digit market price declines compared to Q1 ‘15 • Strong sales volumes of Ferrovanadium, Tantalum, and Silicon were partially offset by lower sales of Antimony
- 24. 24 Critical Materials – Average Quarterly Prices MATERIALS Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 FERROVANADIUM ($/LB) $11.32 $9.76 $8.90 $6.79 $6.59 MOLYBDENUM ($/LB) $8.47 $7.50 $5.83 $4.85 $5.33 NICKEL ($/MT) $14,334 $13,005 $10,557 $9,434 $8,496 ALUMINUM ($/MT) $1,799 $1,765 $1,591 $1,495 $1,515 CHROME ($/LB) $4.50 $4.50 $4.41 $4.09 $3.92 TANTALUM ($/LB) $82 $80 $74 $59 $60 NIOBIUM OXIDE ($/KG) $35 $33 $28 $25 $25 TI SPONGE ($/KG) $9.61 $9.40 $9.40 $9.05 $8.69 ANTIMONY ($/MT) $8,089 $8,617 $6,888 $5,588 $5,359 GRAPHITE ($/MT) $950 $796 $750 $750 $725 SILICON (CENTS/LB) $144 $138 $127 $114 $103 Q1 ‘16 VS. Q1 ‘15 % CHANGE (42%) (37%) (41%) (16%) (13%) (27%) (29%) (10%) (34%) (24%) (29%) Q1 ‘16 VS. Q4 ‘15 % CHANGE (3%) 10% (10%) 1% (4%) 1% (1%) (4%) (4%) (3%) (9%)
- 25. 25 $54.7 $56.3 $54.1 $54.6 $60.8 $3.1 $4.2 $4.9 $2.6 $4.6 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Revenue EBITDA $51.9 $81.8 $67.4 $48.0 $50.5 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Financial Data: Net Debt & Operating Cash flowAMG Engineering REVENUE & EBITDA (IN MILLIONS OF US DOLLARS) ORDER INTAKE (IN MILLIONS OF US DOLLARS) EBITDA IMPROVEMENT DUE TO HIGHER SALES AND LOWER COSTS BOOK TO BILL RATIO OF 0.83X IN Q1 2016 • Q1 2016 revenue up 11% vs. Q1 2015 due to strong sales of plasma remelting furnaces for the aerospace market and induction furnaces for powder metallurgy applications • EBITDA increased by $1.5 million in Q1 2016, the second highest quarterly EBITDA in eleven quarters, due to higher levels of gross profit • AMG Engineering Order backlog of $135.6 million as of March 31, 2016, a 4% decrease versus December 31, 2015 • AMG Engineering signed $50.5 million in new orders during the first quarter of 2016, a 0.83x book-to-bill ratio
- 26. STRATEGY & OUTLOOK AMG Advanced Metallurgical Group N.V.
- 27. 27 AMG: Ready for Growth 2012 2013 2014 2015 2016 to 2020 Cost Reduction Product Mix Optimization Supply Chain Excellence Targeted W/C & Debt Levels Scaling Profitable Growth Cost-reduction and capex discipline in response to global economic slowdown Competitive advantage through manufacturing and supply chain excellence, accelerating cost-reduction efforts Properly positioned, financially and operationally, to pursue growth targets across portfolio Streamlined operations and improved operating performance by eliminating low-margin product lines Further reduction in both working capital and net debt, strengthening the balance sheet
- 28. 28 28 Strategy AMG’s overriding strategic objective is to achieve industry leadership while being the low cost producer INDUSTRY CONSOLIDATION PROCESS INNOVATION & PRODUCT DEVELOPMENT Pursue opportunities for horizontal and vertical industry consolidation across AMG’s critical materials portfolio Continue to focus on process innovation and product development to improve the market position of AMG’s businesses AMG’s strategy is to build its critical materials business through industry consolidation, process innovation and product development EXPANSION OF EXISTING HIGH GROWTH BUSINESSES Pursue opportunities in high-growth areas within the existing product portfolio
- 29. 29 29 2016 Outlook In this challenging environment, AMG will continue to reduce cost, optimize its product portfolio and maintain a conservative balance sheet AMG AMG ENGINEERING In this challenging environment, AMG’s management target is to maintain 2015 levels of profitability in 2016 and continue to generate strong operating cash flow. AMG Engineering expects to return to historic levels of profitability in 2016. Based on the strong order backlog at the end of 2015, and improved cost position, management expects the business to continue to improve its financial performance in 2016. AMG CRITICAL MATERIALS Despite weak metals prices, AMG Critical Materials will continue to be profitable across all business units and generate strong operating cash flows in 2016. CHANGE IN DIVIDEND POLICY The change in AMG’s dividend policy reflects a commitment to return value to shareholders and is a result of an improved balance sheet, ample liquidity and confidence in our ability to generate cash.
- 30. KEY PRODUCTS & END MARKETS AMG Advanced Metallurgical Group N.V.
- 31. 31 Key Products REVENUE (IN MILLIONS OF US DOLLARS) GROSS PROFIT (IN MILLIONS OF US DOLLARS) $- $40 $80 $120 $160 $200 $240 $280 Q1 2015 Q1 2016 Vacuum Furnaces Ti Master Alloys & Coatings Al Master Alloys & Powders Vanadium & FeNiMo Chromium Metal Antimony Tantalum & Niobium Graphite Si Metal $- $9 $18 $27 $36 $45 Q1 2015 Q1 2016 Q1 2016 $44.3 Q1 2016 $237.4 Q1 2015 $257.0 Q1 2015 $43.3
- 32. 32 Critical Materials – Market Trends SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS AMG ANTIMONY ANTIMONY TRIOXIDE ANTIMONY MASTERBATCHES ANTIMONY PASTES PLASTICSFLAME RETARDANTS MICRO CAPACITORS, SUPERALLOYS AMG BRAZIL TANTALUM & NIOBIUM COMMUNICATIONS & ELECTRONICS FUEL EFFICIENCY EXPANDED POLYSTYRENE (EPS), BATTERY ANODES AMG GRAPHITE NATURAL GRAPHITE ENERGY SAVING ENERGY STORAGE ALUMINUM ALLOYS, SOLAR AMG SILICON SILICON METAL FUEL EFFICIENCY CLEAN ENERGY
- 33. 33 Critical Materials – Market Trends AMG ALUMINUM ALUMINUM MASTER ALLOYS ALUMINUM POWDERS FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE INFRASTRUCTURE AMG VANADIUM FERROVANADIUM FERRONICKEL- MOLYBDENUM INFRASTRUCTURE GROWTH AEROSPACE AMG TITANIUM ALLOYS & COATINGS TITANIUM MASTER ALLOYS & COATINGS FUEL EFFICIENCY ENERGY SAVING AMG SUPERALLOYS UK CHROMIUM METAL FUEL EFFICIENCYAEROSPACE CRITICAL MATERIALS MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
- 34. 34 AMG ENGINEERING CAPITAL GOODS (VACUUM FURNACES) FUEL EFFICIENCY ELECTRONICS AMG ENGINEERING VACUUM HEAT TREATMENT SERVICES FUEL EFFICIENCY AEROSPACE, AUTOMOTIVE Engineering – Market Trends AEROSPACE, AUTOMOTIVE PRODUCTS & SERVICES MARKET TRENDSMAJOR END MARKETS MAJOR CUSTOMERS SPEC. METALS & CHEM.ENERGY TRANSPORTATION INFRASTRUCTURE
- 35. 35 AMG IS A GLOBAL SUPPLIER OF CRITICAL MATERIALS TO: MARKET LEADING PRODUCER OF HIGHLY ENGINEERED SPECIALTY METALS AND VACUUM FURNACE SYSTEMS ~3,000 Employees ~$1 billion Annual Revenues At the forefront of CO2 Reduction Q1 2016 REVENUE AMG at a Glance TRANSPORTATIONENERGY INFRASTRUCTURE SPECIALTY METALS AND CHEMICALS BY END MARKET: BY REGION:BY SEGMENT: 45% Europe 33% North America 18% Asia 4% ROW 26% Engineering 74% Critical Materials 22% Infrastructure 23% Specialty Metals & Chemicals 40% Transportation 15% Energy
- 36. APPENDIX AMG Advanced Metallurgical Group N.V.
- 37. 37 AS AT IN MILLIONS OF US DOLLARS MARCH 31, 2016 UNAUDITED DECEMBER 31, 2015 Fixed assets 215.1 215.8 Goodwill and intangibles 34.5 28.9 Other non-current assets 68.2 70.2 Inventories 125.8 126.4 Receivables 146.1 124.3 Other current assets 35.6 29.3 Cash 111.6 127.8 TOTAL ASSETS 736.9 722.7 TOTAL EQUITY 172.1 153.6 Long term debt 115.7 112.2 Employee benefits 142.4 137.9 Other long term liabilities 65.4 69.8 Current debt 13.2 14.5 Accounts payable 118.8 108.0 Advance payments 27.9 44.2 Accruals 44.9 42.9 Other current liabilities 36.6 39.6 TOTAL LIABILITIES 564.8 569.1 TOTAL EQUITY AND LIABILITIES 736.9 722.7 Consolidated Balance Sheet
- 38. 38 FOR THE QUARTER ENDED IN MILLIONS OF US DOLLARS MARCH 31, 2016 UNAUDITED MARCH 31, 2015 UNAUDITED Revenue 237.4 257.0 Cost of sales 193.1 213.7 Gross profit 44.3 43.3 Selling, general & administrative 31.3 30.1 Restructuring & environmental 0.1 1.7 Other income, net (0.0) (0.1) Operating profit 12.9 11.6 Net finance costs 1.8 3.5 Share of profit of associates 1.5 0.1 Profit before income taxes 12.6 8.1 Income tax expense 0.3 5.6 Profit for the period 12.3 2.7 Shareholders of the Company 12.0 2.7 Non-controlling interest 0.3 (0.0) ADJUSTED EBITDA 21.2 20.4 Consolidated Income Statement
- 39. 39 Consolidated Statement of Cash Flows FOR THE QUARTER ENDED IN MILLIONS OF US DOLLARS MARCH 31, 2016 UNAUDITED MARCH 31, 2015 UNAUDITED EBITDA 21.2 20.4 Change in working capital and deferred revenue (22.2) (14.4) Finance costs paid, net (1.3) (0.4) Other operating cash flow (0.1) (1.2) Cash flows from operations before taxes (2.4) 4.4 Income tax paid (1.9) (0.6) Net cash flows (used in) from operations (4.3) 3.8 Capital expenditures (6.9) (3.8) Other investing activities (4.6) (1.7) Net cash flows used in investing activities (11.5) (5.5) Net cash flows used in financing activities (1.4) (0.6) Net decrease in cash and equivalents (17.2) (2.2) Cash and equivalents at January 1 127.8 108.0 Effect of exchange rate fluctuations on cash held 1.1 (6.5) CASH AND EQUIVALENTS AT MARCH 31 111.6 99.3